“The numbers are well rehearsed by now, but the scale of the fiscal challenge facing the Scottish Parliament is unprecedented.

“There is a near £5bn gap between what ministers want to spend on public services by 2030 and the funding available to them. A figure that predates ministers’ 2026 manifesto commitments.“

That’s Stephen Boyle, Auditor General for Scotland. Meet the ‘official opposition’ as the economist, the late Jeremy Peat, once described the role of the accountable officer for Audit Scotland. In his own words, Boyle is ‘committed to public services that improve the lives of Scotland’s people.’

We might add to the unofficial opposition benches other tirelessly focused institutions such as Fraser of Allander, Scottish Fiscal Commission, Institute of Fiscal Studies, IPPR Scotland. Though of course none of them would describe themselves in terms that are tainted with party politics.

Each of these admirable bodies is committed to impartial, rigorously evidence-based analysis – and how the economy is affected by the political choices of the UK’s intertwined governments. All the more important when the Scottish Parliament lacks the ability to hold government to account through a second chamber, effective committee structure or coherent political opposition.

Scotland’s looming challenges cannot be fully assessed until the autumn budget of the UK’s new chancellor of the exchequor and the new prime minister.

But evidence of the daunting task facing Jenny Gilruth, Scotland’s new finance minister, is stacking up with globally-fired inflation and interest rates adding to the pressures. And always the ‘tough decisions’ are further complicated by a lack of transparency obscuring essential scrutiny.

The Scottish Fiscal Commission does not beat about the bush in its latest update: Scottish Fiscal Commission Urges the Scottish Government to be clear about pressure on its spending plans.

The rest of the ‘unofficial opposition’ has responded quickly and clearly. The sooner Scotland faces reality and takes effective action, the better.

Transparency essential to delivery

According to Graeme Roy, Scottish Fiscal Commission chair: “Although funding has increased for 2026-27, the Scottish Government continues to face significant challenges in balancing future budgets.”

He adds:

The delivery of planned savings, managing workforce costs, and the impact of the upcoming UK Budget will all be important factors in determining the funding available for public services in Scotland.

Transparency on the delivery of planned efficiencies and the scale of emerging pressures will help Parliament and the public understand the choices that lie ahead.

“At the start of the new Parliamentary term, the Scottish Government has an opportunity to provide a clear update on progress towards its planned efficiency savings and to identify any new or emerging pressures affecting the 2026–27 and 2027–28 Budgets.”    

There’s no disagreement about the scale of the task and where the difficulties lie.

Commenting on the SFC estimates, the Institute of Fiscal Studies notes ‘disappointing progress’ on headline targets for efficiency savings. “Rather than falling by 0.5% as planned, public sector employment increased by 0.6% in 2025–26.” In fact there’s doubt about the deliverability of big efficiency savings in the NHS “given that Audit Scotland has found that most NHS boards have failed to meet previous efficiency savings targets.”

What’s more…

Higher-than-expected inflation will not only push up the cost of delivering services but is also likely to increase social security benefit spending pressures too. Most benefits are linked to inflation, and the SFC highlight that Scotland’s more generous benefit system means only around 85% of the cost of increasing benefits in line with inflation is covered by UK government funding. The Scottish Government will have to cover the remaining 15% from its other funding. 

Fraser of Allender highlights a problem it has often identified: inconsistencies between desired policy and delivery. In particular, how Scotland’s generous public sector pay policy conflicts with spending targets and efficiency savings.  FAI quotes the SFC warning that 2027-28 will have to accept a real terms pay cut…

The current multi-year public sector pay policy (covering 2025-26 to 2027-28) sets an overall 9% increase, with a 3% cap on any single year. However, pay deals for 2025-26 and 2026-27 have exceeded this 3% cap, and higher than forecast inflation in 2026-27 means pay deals with inflation protection clauses will be reviewed and increased in 2026-27, which will also affect future pay deals. 

The SFC note that unless deals in 2027-28 accept a real terms pay cut, they will exceed the multiyear policy. Recent inflation pressures, linked to the Iran war and oil price shocks, are not included in the most recent forecasts available, and will likely add further pressure to public sector pay deals.

The SFC forecasts average earnings in the devolved public sector to grow at 4.6%, which will be well above the remaining pay policy budget for next year, even after accounting for projected falls in headcount. However, the target to decrease public sector workforce by 0.5 per cent a year on average from 2025-26 to 2029-30 has not been met in 2025-26. Instead, the workforce has grown in this year, to around 5,100 more staff than the target goal. Without larger reductions from 2026-27 onwards to meet this goal, pressure on the public sector pay bill will increase.

Vision is not enough

This is the kind of informed straight-talking you will not hear in Scottish Parliament debates – although it will not be unknown to the Public Audit Committee where the Auditor General presents reports which are broadcast live via the Scottish Parliament’s website. The post, after all, was created under the Scotland Act 1998 to help ensure public money is well spent.

Boyle’s latest blog on the state of Scotland’s services does not mince words. Asking “Is Scotland serious about public service reform?” he draws a distinction between impressive policies – there’s a Cabinet Secretary for Public Service Reform, a public service reform strategy, a public service reform board, and a new public reform parliamentary committee to hold ministers to account – but now decisive action is essential. And the record on delivery is not impressive.

My audits, and those of my predecessors, have shown repeatedly that the Scottish Government is good at setting out its vision, producing strategies, frameworks, and plans. But it has struggled to deliver on policy ambitions.

Service reform has been talked about for a long time but so far there has been no evidence of large-scale change on the ground since the creation of Police Scotland in 2013.

Instead, what we have seen is short-term measures that have helped balance annual budgets rather than fundamental changes to how services are delivered.

What needs to happen? For Boyle it’s prevention: “investing in policies that prevent problems in people’s lives taking root and helping relieve future pressures on public services… a cornerstone of the new Public Service Reform strategy.”

Nevertheless, the Auditor General, like Scottish Fiscal Commission, see that there is a chance to do better. His blog ends with a positive challenge.

Take tangible action…with pace

Stephen Boyle says he believes change is possible, that effective reform can ensure that government provides sustainable public services.

The task is formidable, requiring collective collaboration across government departments, ministers, parliament, public sector – and the public.

That all depends on the so-far elusive transparency and scrutiny

Without clear priorities, robustly costed and adequately resourced policies, agreed delivery timelines, and well understood measures of success, meaningful reform will be difficult to deliver.

But the stakes are now higher than ever.

If the right foundations aren’t put in place in this Parliament, the consequences for public services will be far greater in the future. And much more difficult and painful to fix.

Picture: Rob Bruce @rbr747

Further reading

FSC: Fiscal Commission urges the Scottish Government to be clear about pressure on spending plans

IFS: Response to Scottish Fiscal Commissions August 2026 update

FAI: Fiscal update: Where does Scotland stand ahead of the budget?

Audit Scotland: Attention to detail a must for public service reform

IPPR Scotland: Reactions to Holyrood election sets out six immediate tasks